Blockbuster sees sizable Q3 net loss

Blockbuster has announced their financial statement for the Q3 in which the company saw total revenues decreasing by 5.7 percent to 1.24 billion USD. The net loss was 35 million USD as compared to a net loss of 24.7 million USD for the same period in 2006.

The company blamed the decrease in revenue on the closure or sale of 526 separate stores but did say they had seen an increase in revenue from its online rental service.

"We believe the actions we have taken over the last quarter have better positioned Blockbuster for the future," said Jim Keyes, Blockbuster's chairman and CEO.

The Blockbuster management has plans to "reduce annualized overhead costs by approximately USD 45 million through the elimination of staffing and operational redundancies in their in-store and online corporate support structure and through improvements in other operating efficiencies" and has already begun implementing the plan.

27 user comments

Tick, tick, tick... its just a matter of time before you go under. At least all your stores anyways. One by one thet will close. Who wants to pay $4 for a movie or $7 for a game to rent? Too expensive!

Quote:The Blockbuster management has plans to "reduce annualized overhead costs by approximately USD 45 million through the elimination of staffing and operational redundancies in their in-store and online corporate support structure and through improvements in other operating efficiencies" and has already begun implementing the plan.

I see a major overhaul in their corporate structure, and a significant reduction in number of personnel.

Originally posted by chuckdog: They should have went with hd-dvd instead of bluray. lol

thats not why they're losing money.if they went hd-dvd they would've lost more because blu-ray has been winning each week.the problem is movies themselves.it's the companies that make them which charge high prices and renting is suffering because of that since now we can download or watch streamed movies thru the net.

Funny prices have not changed so much to double the price of game, they want to know why they are failing they are losing money from high prices like other parts of the media industry.

they need to wake up and change their prices 5$ for a movie/game for 4 days(this gives plenty of time to return) or 3 of any for 10.99 and 3$ for every 2 above that.

Also put a disc cleaner/re surfer in every store and charge 50% of the rent price to have your discs repaired.

Also change the online rental plans to be more like they were before the change, a middle ground would be best to keep it makinga profit but giving the consumer more options, also give the consumer a option to have movies mailed to them or to the store for pickup from BB online.

Originally posted by chuckdog: They should have went with hd-dvd instead of bluray. lol

- Well it might be kinder to say they ought not to have rid themselves of a growing customer base at a ridiculously premature time in the so-called 'format war'.

How things can quickly change, eh?

The HD DVD customer base is about to take a huge leap this holidays......but now 'everyone' knows that if you want HD DVD you go elsewhere, not to BlockBusters.

Smart move, not.

(and all those little negatives are adding up into a major problem for them; £10/$20 to the charity of your choice says they change policy by the end of Jan/Feb 2008 when the Q4 retail numbers come out)

Originally posted by chuckdog: They should have went with hd-dvd instead of bluray. lol

- Well it might be kinder to say they ought not to have rid themselves of a growing customer base at a ridiculously premature time in the so-called 'format war'.

How things can quickly change, eh?

The HD DVD customer base is about to take a huge leap this holidays......but now 'everyone' knows that if you want HD DVD you go elsewhere, not to BlockBusters.

Smart move, not.

(and all those little negatives are adding up into a major problem for them; £10/$20 to the charity of your choice says they change policy by the end of Jan/Feb 2008 when the Q4 retail numbers come out)

I dunno BB's business plan is failing because they are not doing enough volume new formats aside they need to overhaul their setup in order to stay in the fight.

When netflix came along they revolutionized the industry. They're just now recovering from them whipping the crap out of them. I mean their in store service is so much better now it's like night and day. The in store exchanges and no late fees is going to save their asses. They may lose a little money but at least they won't go under. It has nothing to do with the format war either, why does it always come down to that?

Originally posted by OhCrap: When netflix came along they revolutionized the industry. They're just now recovering from them whipping the crap out of them. I mean their in store service is so much better now it's like night and day. The in store exchanges and no late fees is going to save their asses. They may lose a little money but at least they won't go under. It has nothing to do with the format war either, why does it always come down to that?

BB needs to change but I can see them closing down stores to do it, for a long time we had 2-4 stores close to each other now we have 1-2.

Quote:it's the companies that make them which charge high prices and renting is suffering because of that since now we can download or watch streamed movies thru the net.

We've always had PPV movies and more recently, Video-On-Demand, which I think is more accessible to the masses than the downloading methods known to the readers of this site.

Quote:Funny prices have not changed so much to double the price of game, they want to know why they are failing they are losing money from high prices like other parts of the media industry.

They are covering expenses... ever hear of inflation? I said in another forum, when VHS was king, the pricing scheme was different and rental chains had the privilege of having the movie on the shelf before retail stores did. Hence, if you wanted to see it "today" you had to rent, there was no option to buy for weeks or months! Now with DVD, the street dates are the same, and you can decide to rent or buy.

Family Video is a discount chain that does rent in the $1-$2 price range, and lots of freebies, but they are a privately held company, and own the businesses that build their infrastructure (stores, land, furniture, etc.) I can tell you from the inside, they bleed money if they don't collect late fees or sell movies & games "previously viewed." Some of their locations lose as much as $10,000 a month just in theft (in-store and non-return of product.)

Quote:When netflix came along they revolutionized the industry...The in store exchanges and no late fees is going to save their asses.

Hollywood used to make around 30% of their revenue from late fees alone. They count on you not returning something on time. BlockBuster partially shot themselves in the foot, because how can you lower prices when you cut a 1/3 of your revenue stream? Also, the "adult" rooms in video stores can account for up to 10% of revenue as well, and the stores that don't have those either will lose even more.

Quote:it's the companies that make them which charge high prices and renting is suffering because of that since now we can download or watch streamed movies thru the net.

We've always had PPV movies and more recently, Video-On-Demand, which I think is more accessible to the masses than the downloading methods known to the readers of this site.

Quote:Funny prices have not changed so much to double the price of game, they want to know why they are failing they are losing money from high prices like other parts of the media industry.

They are covering expenses... ever hear of inflation? I said in another forum, when VHS was king, the pricing scheme was different and rental chains had the privilege of having the movie on the shelf before retail stores did. Hence, if you wanted to see it "today" you had to rent, there was no option to buy for weeks or months! Now with DVD, the street dates are the same, and you can decide to rent or buy.

Family Video is a discount chain that does rent in the $1-$2 price range, and lots of freebies, but they are a privately held company, and own the businesses that build their infrastructure (stores, land, furniture, etc.) I can tell you from the inside, they bleed money if they don't collect late fees or sell movies & games "previously viewed." Some of their locations lose as much as $10,000 a month just in theft (in-store and non-return of product.)

Quote:When netflix came along they revolutionized the industry...The in store exchanges and no late fees is going to save their asses.

Hollywood used to make around 30% of their revenue from late fees alone. They count on you not returning something on time. BlockBuster partially shot themselves in the foot, because how can you lower prices when you cut a 1/3 of your revenue stream? Also, the "adult" rooms in video stores can account for up to 10% of revenue as well, and the stores that don't have those either will lose even more.

BB needs to rent stuff for 5 a pop every 4 days and 5$ every 4 days, if you are a day late thats 5$ for the first 3$ for every 2 after , its a better way to rake in money but not totally rape the consumer, a better way to do it is to tie in member cards to 15$ a month 3 at a time deal, if you pay 15$ for 30 days you get a choice of 3 of anythin gas long as you want it till the end of the 30 days, if everythign is not returned its 15$ for another 30 days or 1$ a day up to 10 days whichever the consumer prefers there are many schemes that are consumer friendly but I have a feeling BB can only do so much the media mafia sets their rates....

Quote:...a better way to do it is to tie in member cards to 15$ a month 3 at a time deal, if you pay 15$ for 30 days you get a choice of 3 of anything gas long as you want it till the end of the 30 days....

Hollywood does this, it's called "MVP" which I used to have. It was $10 or $15 a month, 3 at a time in store, but did not include the newest releases for a few weeks, so they could get you to pay full rental price for it. The rest of the store, however, was fair game. The only issue with this concept versus Netflix, as I've stated before, is that Netflix can cover a regional area with ONE warehouse, instead of stocking 30+ stores in the same area.

Example: Netflix has a warehouse in Cleveland, Ohio. That covers at least Northeastern Ohio (Cleveland, Akron, Youngstown) and parts of Western Pennsylvania, and who knows how much farther their reach.

Plus, we know Netflix only carries those hard to find movies at some of their warehouses, and can ship direct from there (.ie California) where Hollywood needs to have a copy in EACH store if there is demand for it.

Unless they can micromanage their stores into warehouses that the customer can physically travel to, I'm afraid they don't have much of an advantage.

Netflix's advantage is price of barrier and 24/7 online service. Hollywood's advantage is faster turn around time and a physical store to browse. Blockbuster was very close to bringing both worlds together, but seems to me they've dropped the ball on their Total Access.

Quote:...a better way to do it is to tie in member cards to 15$ a month 3 at a time deal, if you pay 15$ for 30 days you get a choice of 3 of anything gas long as you want it till the end of the 30 days....

Hollywood does this, it's called "MVP" which I used to have. It was $10 or $15 a month, 3 at a time in store, but did not include the newest releases for a few weeks, so they could get you to pay full rental price for it. The rest of the store, however, was fair game. The only issue with this concept versus Netflix, as I've stated before, is that Netflix can cover a regional area with ONE warehouse, instead of stocking 30+ stores in the same area.

Example: Netflix has a warehouse in Cleveland, Ohio. That covers at least Northeastern Ohio (Cleveland, Akron, Youngstown) and parts of Western Pennsylvania, and who knows how much farther their reach.

Plus, we know Netflix only carries those hard to find movies at some of their warehouses, and can ship direct from there (.ie California) where Hollywood needs to have a copy in EACH store if there is demand for it.

Unless they can micromanage their stores into warehouses that the customer can physically travel to, I'm afraid they don't have much of an advantage.

Netflix's advantage is price of barrier and 24/7 online service. Hollywood's advantage is faster turn around time and a physical store to browse. Blockbuster was very close to bringing both worlds together, but seems to me they've dropped the ball on their Total Access.

Mmmm it seems BB jsut lacks the wilingness to adapt and change there plans to a price consumers would be willing to pay in droves...

I am not surprised by this news. I have been a blockbuster online customer for three years. My main complaint is that Blockbuster keeps raising the cost of their online plans when i started out it was 14.95 for 3 movies at a time with instore return privileges and two free game or video rentals per month. The free 2 free game rentals each month made this plan worth it since the game rentals where worth as much as the monthly plan cost. then after a year Blockbuster sent out an online survey, then shortly after that they raise the cost of the pan to 17.95. Their latest plan change came late this summer with the plan changing to three movies at a time but discontinued the two free video or game cupons per month and increase the price to 24.95 a month, a 7.00 increase and they discontinued the one true thing that i found valuable which was the two free video or game coupons. I have talked to several of the clerks at my local blockbuuster an d they say that several customers have complained about the price increases and have canceller their plans.

I have decided to fight back and cancell my online membership as well and i have found a better free source of movies, my local library has allows you to reserve new release movies and get them for free, it may take a few weeks or months depending upon demand, but I am saving 25.00 a month. So screw Blockbuster, they did not listen to their customers only their stockholders.

A lot of the reasons for DVD rentals and DVD sells dropping is because the movie industry is making much less desirable movies and less block buster movies, plus any half made and half good directed movies end up on cable. With all the high definition LCD TV's on the market more people are staying home watching cable or satelite.

BB may as well be your local DRUG DEALER,as they hook you in with the $17.99 ALL YOU CAN WATCH-ALL YOU CAN RENT IN STORE rentals, and just as soon as you get accustomed(hooked)on the plan(video crack), they close you out, give you the "OPTION?" to change up, and in turn increase their profits BY 43% without giving you anymore than you had before. I may be wrong,but they seem to fit the criteria of a DEALER to me.BAD BOYS,BAD BOYS WHATCHA GONNA DO..........

Originally posted by Cornholeo: BB may as well be your local DRUG DEALER,as they hook you in with the $17.99 ALL YOU CAN WATCH-ALL YOU CAN RENT IN STORE rentals, and just as soon as you get accustomed(hooked)on the plan(video crack), they close you out, give you the "OPTION?" to change up, and in turn increase their profits BY 43% without giving you anymore than you had before. I may be wrong,but they seem to fit the criteria of a DEALER to me.BAD BOYS,BAD BOYS WHATCHA GONNA DO..........

they changed the plan months ago didn't they?
its not like thos who stay on it suddenly get a increase in service charges.

No late fees? What Blockbuster has no late fees? Their new policy is that you can keep the movie for 7 days longer than it was originally due, and then after that, your credit card is charged for the full retail price of the movie (like $29). Looks, smells, and tastes like a late fee to me.

Is there a format war going on? Haha. Seriously, smart customers who don't feel the need to be on the absolute bleeding edge of technology are completely unaffected by this. DVD quality/resolution is enough for 99% of the population. For those 1% who insist on the extra pixels for the viewing pleasure, just go through the OnDemand feature of your cable company, and watch the HD version for $3-4. Never have to leave the house, HD quality/resolution without format war issues -- really, what could be better?

The comments saying DVD rentals are shrinking is not true. Info from movie studios and distributors confirms that. Look at companies like Redbox DVD rental. They now have more kiosk locations than Blockbuster has - and adding more. I switched to Redbox. Rent a movie for $1 That is where BB is loosing their business to.